LNG strikes in TT impacts on Repsol’s bottom line

Spanish oil company Repsol  posted net profits of US$1.29bn in the first half of 2004, down 7.7% from the same period in 2003, the company said in its earnings statement. In the second quarter, net income increased 12.6% to  due to higher oil prices and better international refining margins, offset by the negative effect of a higher euro against the US dollar year-on-year and higher company taxes. Overall net operating income increased 5% to 1.27bn euros in the first half and Latin American net operating income increased 3% to 1.11bn euros.

The reasons for this performance were: higher gas production and sales, mainly in Bolivia and Argentina; high international oil prices and improved gas realization prices, offset by the depreciation of the US dollar against the euro; the application of the natural gas export tax in Argentina, the country’s higher taxes on crude exports and lower oil prices due to the price-fixing agreement between producers and refiners; a rise in the level of crude oil stocks; and strikes in Argentina and operating problems in Trinidad & Tobago. The average price for liquids in the half rose to US$28.9/b compared to US$25.8/b in 2003, while the average gas price in Argentina was 17.4% higher year-on-year. Average first half year production was 1.15 million barrels of oil equivalent a day (mboe/d), 6.4% more in the same period 2003.

However, the strikes in Argentina and Trinidad & Tobago had a negative impact of 11,500boe/d. Half-year gas production rose 16.6% year-on-year to 460 million cubic feet a day (mcf/d) mainly due to growth in Argentina, where gas output rose 16.5% to 277mcf/d because of higher domestic demand, and Bolivia where production jumped 51.7% to 130mcf/d because of higher sales to Brazil and the start of exports to Argentina in the second quarter.

The production of liquids dropped 2.2% versus first half 2003, largely in Argentina. The labor strikes in Argentina and in Trinidad & Tobago in H1 led to a production shortfall of 10,400b/d. Repsol YPF’s overall lifting cost for the half year was US$1.87/boe, 8.2% higher than the year before. Exploration expenses amounted to 87mn euros, up from 78mn euros the year before. Overall net operating income increased 4.8% to 739mn euros, mainly due to higher refining margins, but Latin American net operating income fell 28.2% to 204mn euros.